ESOP Companies Show Economic Growth

September 15, 2014 (PLANSPONSOR.com) – The Employee Ownership Foundation’s 23rd Annual Economic Performance Survey of ESOP companies found that these companies continue to see increased economic growth in many areas.

“As we’ve said before, research proves that ESOPs [employee stock ownership plans], and companies with other forms of broad-based employee ownership, provide more sustainable employment for U.S. workers,” said Employee Ownership Foundation President J. Michael Keeling. “Our national leaders need to take note, step up and encourage broad-based inclusive capitalism and increase employee ownership, to ensure sustainable employment and more income for average pay employee owners. It’s the best jobs policy we have in this country.”

ESOP companies continue to have increased share value, report high productivity among employee owners, and have overwhelming support for ESOPs among leaders of the companies, according to the results of this survey, which was conducted among the more than 1,500 members of the ESOP Association during this summer. The results are based on 503 responses, a 34% response rate.

Since the Employee Ownership Foundation’s annual economic survey began 23 years ago, a very high percentage (93%) of survey respondents have consistently agreed that creating employee ownership through an ESOP was “a good business decision that has helped the company.” This figure has been over 85% for the last 14 years the survey has been conducted. In addition, 76% of respondents indicated the ESOP positively affected the overall productivity of the employee owners.

In terms of revenue and profitability, 70% of respondents noted that revenue increased, and 64% of respondents reported that profitability increased. In terms of stock value, the majority of respondents (80%) stated the company’s stock value increased as determined by outside independent valuations; 18% of respondents reported a decline in share value; 2% reported no change. The survey also asked respondents what year the ESOP was established. Among those responding to this survey, the average age of the ESOP was 16 years, with the average year for establishment being 1998.

The survey asked companies to indicate their performance in 2013 relative to 2012: